Byrd v. Pilot Fire Insurance, 201 N.C. 407 (1931)

Oct. 7, 1931 · Supreme Court of North Carolina

201 N.C. 407

JAMES BYRD v. PILOT FIRE INSURANCE COMPANY, C. C. CANADY, Trustee for L. J. BEST, and L. J. BEST.

(Filed 7 October, 1931.)

1. Judgments G a — Judgment creditor or his assignee has only lien on land of judgment debtor hut no estate or title therein.

A judgment creditor or his assignee has a lien on the lands of the judgment debtor, and where the judgment is duly docketed, the lien exists against a subsequent purchaser from the judgment debtor, carrying with it the right to subject the property and improvements thereto to the satisfaction of the debt, but the judgment creditor or his assignee has no title or estate in the lands. C. S., 614.

2. Insurance D a — Claimant having no contract with insurer in this case the question of insurable interest does not arise.

Where a judgment creditor does not insure his interest in the lands of the judgment debtor and there is no loss payable clause in his favor attached to a policy of fire insurance taken out by the judgment debtor, the question of whether the judgment creditor has an insurable interest in the property does not arise in an action on the policy taken out by the judgment debtor.

3. Insurer N e — Judgment creditor having only lien and no contract with insurei* is not entitled to jn'oceeds of policy.

A judgment creditor or his assignee, having only a lien on the lands of the judgment debtor, is not entitled to the proceeds of a policy of fire insurance taken out on the property by the judgment debtor or his transferee in the absence of a contract between the judgment creditor or his assignee and the insurer.

Appeal by defendant, L. J. Best, from MacRae, Special Judge, at February Term, 1931, of HaeNBTt.

Affirmed.

Tbis is an action to recover on a policy of insurance for $500.00, issued to tbe plaintiff by tbe defendant, Pilot Fire Insurance Company, on 24 May, 1930.

Tbe property insured by said policy against loss or damage by fire was a one-story, frame building located on a lot in tbe town of Dunn, Harnett County, N. C. Tbis building was destroyed by fire on 22 August, 1930. Tbe defendant, Pilot Fire Insurance Company, admitted its liability under tbe policy for tbe sum of $500.00, but declined to pay said sum to tbe plaintiff, until tbe validity of tbe claim of tbe defendant, L. J. Rest, tbe owner of a docketed judgment, wbicb was a lien on tbe lot of land on wbicb said building was located, at tbe date of its destruction by fire, bad been first determined.

Tbe defendant, L. J. Best, is now and was at tbe date of tbe fire wbicb destroyed tbe building covered by tbe policy of insurance, tbe owner of a judgment wbicb was rendered by tbe Superior Court of Harnett County in favor of John Beasely and against R. L. Godwin for tbe sum of $900.00. Tbis judgment was duly docketed on tbe judgment docket of tbe Superior Court of Harnett County, and on 19 March, 1926, was duly transferred and assigned to tbe defendant, C. C. Canady, trustee for L. J. Best. Tbe defendant, L. J. Best, is tbe owner of said judgment.

Tbe judgment debtor, R. L. Godwin, at or subsequent to tbe date of tbe docketing of said judgment, was tbe owner of tbe lot of land on wbicb tbe building destroyed by fire on 22 August, 1930, was located. He conveyed tbe said lot of land to J. D. Barnes by a deed wbicb bas never been registered. Thereafter, for a valuable consideration, J. D. Barnes conveyed said lot to tbe plaintiff by a deed wbicb was registered in tbe office of tbe register of deeds of Harnett County on 29 June, 1927.

After tbe said lot was conveyed to him by J. D. Barnes, tbe plaintiff erected thereon tbe building which was destroyed by fire.

On 24 May, 1930, tbe defendant, Pilot Eire Insurance Company, issued to plaintiff tbe policy of insurance sued on in tbis action, by wbicb tbe said defendant insured tbe plaintiff against loss or damage by fire on said building in tbe sum of $500.00. There is no loss payable clause in said policy in favor of tbe defendant, C. C. Canady, trustee for L. J. Best, or in favor of tbe defendant, L. J. Best.

Plaintiff bad no actual knowledge of tbe existence of tbe judgment owned by tbe defendant, L. J. Best, at tbe date of tbe erection of said building. He knew, however, prior to tbe issuance of tbe policy of insurance that said defendant owned said judgment, and that said judgment was a lien on tbe lot on wbicb be bad erected tbe said building. There was no agreement between plaintiff and tbe defendant, L. J. Best, with respect to insurance on tbe building against loss or damage by fire.

After tbe destruction by fire of tbe building insured by tbe policy of insurance, and prior to tbe commencement of tbis action, tbe defendant, L. J. Best, notified tbe defendant, Pilot Eire Insurance Company, that be claimed tbe proceeds of said policy by virtue of bis lien, as tbe owner of tbe docketed judgment against R. L. Godwin, on tbe lot of land at tbe date of the fire. Upon its receipt of tbis notice, tbe defendant, Pilot Fire Insurance Company, notified tbe plaintiff tbat it would not pay tbe amount due under tbe policy until tbe validity of tbe claim of tbe defendant, L. J. Best, bad been first determined. Thereafter tbis action was begun.

Upon tbe foregoing facts, found by tbe court from tbe pleadings, it was ordered, considered and adjudged tbat the defendants, C.. C. Canady, trustee for L. J. Best, and L. J. Best, bad no insurable interest in tbe building insured by tbe policy of insurance issued by tbe defendant, Pilot Fire Insurance Company, on 24 May, 1930, and destroyed by fire on 22 August, 1930, by virtue of tbe lien of tbe docketed judgment against E. L. Godwin, and that said defendants are not entitled to tbe proceeds of said policy of insurance.

It was further ordered, considered and adjudged tbat plaintiff recover of tbe defendant, Pilot Fire Insurance Company, tbe sum of $500.00, with interest, and of tbe defendant, L. J. Best, tbe costs of tbe action.

From tbis judgment, tbe defendant, L. J. Best, appealed to tbe Supreme Court.

Clifford & Williams for plaintiff.

James Best for defendant, L. J. Best. .

Hoyle & Harrison for Insurance Company.

CONNOR, J.

On tbe facts found by tbe court at tbe trial of tbis action, tbe judgment against E. L. Godwin for tbe sum of $900.00, wbicb was duly docketed on tbe judgment docket of tbe Superior Court of Harnett County, and wbicb was subsequently transferred and assigned to tbe defendant, L. J. Best, who is now tbe owner thereof, was a lien on tbe lot of land now owned by tbe plaintiff, at tbe date of tbe issuance of tbe policy of insurance sued on in tbis action, and also at tbe date of tbe destruction by fire of tbe building covered by said policy. C. S., 614. Eaton v. Doub, 190 N. C., 14, 128 S. E., 494.

Tbe defendant, L. J. Best, bad tbe right to enforce tbis lien by tbe sale of tbe lot of land, with all improvements thereon, under execution on tbe judgment, or by other appropriate proceeding. He bad, however, no title to or estate in tbe lot of land, or tbe building located thereon; be bad only tbe right to have tbe land and improvements thereon, whether made by tbe judgment debtor, or by tbe plaintiff, who claims title to tbe lot of land under an unregistered deed from tbe judgment debtor, appropriated to tbe satisfaction of tbe judgment. Farrow v. Ins. Co., 192 N. C., 148, 134 S. E., 427; Eaton v. Doub, 190 N. C., 14, 128 S. E., 494.

Tbe question as to whether the defendant, L. J. Best, had an insurable interest in the building located on the lot of land, which was destroyed by fire on 22 August, 1930, is not presented in this action. It has been held that one holding a lien on property to secure a debt has an insurable interest in such property to the amount of the lien. 26 C. J., 27. In the instant case, the defendant, L. J. Best, had not insured his interest, as the owner of the judgment lien, in the building on the lot of land. The policy issued to plaintiff and sued on in this action contains no loss payable clause directing that the loss, if any, under the policy shall be paid to the defendant; nor was there any agreement on the part of the plaintiff to insure the building for the benefit of the defendant. Fitts v. Grocery Co., 144 N. C., 463, 57 S. E., 164, cited and relied upon by the appellant, has no application to the facts of this case.

The only question presented by this action is whether the defendant, L. J. Best, as the owner of a judgment lien on the lot on which the building insured was located, is entitled to the proceeds of the policy issued to the plaintiff by the defendant, Pilot Fire Insurance Company. This question was decided by the court below in the negative. In this, there was no error.

“One who has a mere lien only on the insured property has no claim to the insurance money realized by the insured in the event of the loss of the property, for a claim on the insurance money can arise only out of contract.” 26 C. J., 445. In the instant case there was no contract between the insurance company and the defendant, L. J. Best, or between said defendant and plaintiff, with respect to insurance on the building which was destroyed by fire.

The judgment that plaintiff recover of the defendant, Pilot Eire Insurance Company, the sum of $500.00, and of the defendant, L. J. Best, the costs of the action, is

Affirmed.